Presentation on the market size of the cloud in Australia

2. HOW BIG IS THE CLOUD? PHILIP GOLDIE, Director, Server & Tools OSCAR TRIMBOLI, Director, Information Worker LINUS LAI, Associate Director, IDC #apc2010 @philgoldie @oscartr

3. …how big is the opportunity? …where is the opportunity? …how do I capture the opportunity?

4. The Cloud and You:New Delivery Models Bring New Opportunities Linus Lai IDC Australia

5. Agenda 5

6. 6

8. Refocusing on “doing the right thing” again, not the least expensive

9. For customers

10. For shareholders

11. For competitive advantage

12. Efficiency still matters, but not if it impacts business performance

13. Availability

14. FlexibilitySource: IDC Server Virtualization MCS 2007, 2008, 2009; IDC Datacenter and Cloud Survey 2010

15. Recovery and Transformation Key Market Transformations Telecom – fiber, 3G/4G wireless, converged IP delivery, new distribution models IT – market expansion through disruptive Cloud model, driving re-architecture of vendor models, offerings, identities Ascendance of mobile devices – and apps – challenging primacy of the PC Shift of customer “design point” toward SMB/consumer, emerging markets 8

16. 2010: Intelligent Economy Emerging 1 billion mobile Internet users; 500,000 mobile phone apps 700 million social networkers 630 million laptops; 80 million netbooks 1.2 billion mobile phones; 220 million smart phones 9 Public cloud spending $23 B 50 million servers, half virtual 20 million smart meters in US 7 billion communicating devices in place – 5 billion of these are NOT computers

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19. Self-service

20. Elastic

21. Usage-based pricingHigh Availability Cloud Today Multi PurposeClouds Test & Dev Cloud HPC Cloud Low Cost Cloud Comms Cloud 11

22. Three Basic Layers of the Cloud Workloads Platforms ERP email CRM OLTP Collaborative Decision Support Web App. Dev. Streaming Security Caching Networking File Sys Mgmt Technical Server Storage Network IT Cloud Services Cloud Applications Software as a Service (SaaS) Cloud Platform Platform as a Service (PaaS) Cloud Infrastructure Infrastructure Services (IaaS) 12

23. Cloud Market Will Win More of Australia ICT Spend 9.4% Proportion of total AUD million Cloud services will not replace traditional delivery models in all situations Though cloud is not a large part of the overall spend, it’s growing much faster This rapid growth is attractive & causing new entrants to emerge, and non-traditional IT vendors to pay attention The age of influence for the product vendors is waning 22.5% CAGR growth to 2014 5.5% * DC spend is categorised by server/storage hardware and software 13

25. Clear that cloud computing alternatives will be considered for application upgrade and replacementSource: IDC Cloud Computing Survey, April 2010 (N=600 in Aust, Korea, India, S’pore, PRC & HK) 14

26. Various Deployment Models EmergingHosted & Outsourced Outsourced Enterprise Data Center Enterprise Data Center Hosted Infrastructure & Applications SaaS, IaaS & PaaS Hosted and managed by the internal IT department Hosted and managed by an external service provider on a ‘1:many’ basis. Pricing model can be fixed. Public Cloud services delivered over the internet based on a ‘pure’ utility pricing model Hosted and managed by an external service provider on a 1:1 basis 15

27. Various Deployment Models EmergingThe Virtual Private Cloud Outsourced Enterprise Data Center Enterprise Data Center Virtual Private Cloud Hosted Infrastructure & Applications SaaS, IaaS & PaaS Leveraging the Public Cloud attributes within the network perimeter Hosted and managed by the internal IT department Hosted and managed by an external service provider on a ‘1:many’ basis. Pricing model can be fixed. Public Cloud services delivered over the internet based on a ‘pure’ utility pricing model Hosted and managed by an external service provider on a 1:1 basis 16

29. Ongoing drive to maximize return on existing IT assets

30. 2010 has been a big year for the announcement of "private cloud" offerings from virtually all major IT suppliers

31. Clouds typically package infrastructure, platforms and applications together so…

32. Private cloud announcements will drive many strategic partnerships, joint ventures and acquisitions/mergers.17

33. Workloads in the Cloud - Australia 18

35. Information archival

40. Subject to Sarbanes-Oxley

41. IFRS

42. JSOX19 19

44. Consider the Cloud as an extension of your sourcing strategy, not a technology

45. Building IT services in the Cloud is a long journey, comprised of many steps

46. Honest appraisal may reveal that enterprises cannot complete the journey on your own

47. Selective use of public cloud services, external private clouds and cloud appliances along with existing delivery models will become the norm by 201520

48. 21

49. Impact of the CloudThe Channel Viewpoint Do you view cloud computing as: The majority of channels view the cloud as an interesting emerging model – and realize that it is redefining the channel ecosystem and their business model. Importantly, 1 in 2 see it as an opportunity. Source: IDC PartnerConnect Quick Poll (April 2010) 22

50. The Move Towards ServicesImpact of the Cloud Do you currently/plan to offer cloud computing professional or consulting services? Cloud is a highly consultative engagement with high professional services attach and it promotes channel transition to services oriented business model. Source: IDC PartnerConnect Quick Poll (April 2010) 23

51. Channel Partners in Asia/Pacific IDC Partner Segmentation Model 24

52. Understanding if current Architecture (Infrastructure and Applications) is ready for Private/Hybrid Cloud Migrating to a Cloud Architecture Securing Converged IT Department Skill Sets Defining Provisioning Policies when Migrating to Private Cloud Defining Policies for Deploying Workloads in a Hybrid Environment Charging Line of Business for Virtual Assets Private Cloud ImplicationsWhat Activities will End-Users struggle with? 25

53. Cloud ImplicationsOpportunities Require a New Mix of Skill Sets 26

55. However, the right skills are in short supply, so partners can and will play an important role

56. Go-to-market conflict needs to mitigated and customer demand will be criticalVendor Service Delivery Sub-contracted Partners Full Service Enabled Partners Vendor Account Management Customer 27

57. Adapt or Vanish:Hosting and Managed Infrastructure Services Both hosting and managed infrastructure services remain viable business models, However, it will be essential to transition delivery models to use cloud computing The profitability of managed infrastructure offerings will rapidly erode as new players enter the market with cloud-based models 28

58. Channel Partners in Asia/Pacific IDC Partner Segmentation Model 29

60. Provision of a Plug and Play Cloud Infrastructure along with a Development Platform

61. With Traditional On-Premise Licensing30

62. Channel Partners in Asia/Pacific IDC Partner Segmentation Model 31

64. One time referral fee paid to reseller and distributor

65. Annuity

66. A.k.a. pass through; recurring revenue

67. May include renewals

68. May include tiered programs (basic, gold, platinum, etc.)

69. White label

70. Allows partner to resell cloud service under their own brand name

71. Partner can add cloud capabilities to their other solutions and service offerings

72. Pass through business model; partner gets X% gross margin

73. Service delivered by cloud provider on cloud provider’s infrastructure

74. Partner does first level support

75. Simple Referral fees are less popular, but not out of the question Source: IDC PartnerConnect Quick Poll (April 2010) 32

77. Low partner investment and risk

78. Not an annuity, no recurring revenue

79. Partner less visible in customer’s cloud planning

81. Annuity type recurring revenue

82. Partner maintains customer relationship

83. Cloud provider must manage for channel conflict

84. Low margin business

86. Easy to integrate cloud offerings into other partner solutions

87. Partner owns the cloud brand

88. Partner assumes more risk

89. Tech support model complexWhite Label Program 33

90. Essential Guidance for PartnersQuestions to be Addressed Private Cloud: Have you got the right in-house skills? Are vendors providing incentives & training for partners to develop specific skill-sets for the private cloud? Are you able to leverage any productized professional services through from vendors to address private cloud type of requirements? Do you have reasonable GTM conflict sufficiently addressed from vendors as you build out your own consulting capabilities? Public Cloud: How are you drafting commercial agreements with particular focus on SLAs? How are you communicating your value proposition over going direct to the vendor to your customers? What training and education are you receiving on the public cloud? What about new consulting and integration skill-sets? Are you involved in testing new partner programs to resell public cloud services? 34

91. If you have additional questions, please contact me at: Linus Lai llai@idc.com +612 9925 2274 Questions? 35

92. SaaS $AUD 1,622m CAGR 5.3% $AUD 70m CAGR 31.3% $AUD 274m CAGR 15% PaaS $AUD 121m CAGR 58% $AUD 128m CAGR 36% $AUD 1,445m CAGR 7.5% IaaS $AUD 54m CAGR 30% $AUD 97m CAGR 44% $AUD 1,350m CAGR 6.2% SOURCE: IDC PUBLIC ON PREMISE HOSTED

93. Wednesday September 1

94. Thursday September 2

95. the cloud #apc2010… attend the cloud track sessions sign up today for 250 internal users BPOS at the GPS booth Start the Azure conversation